Extreme weather and cargo theft caused the most damage to global supply chains last year, according to a study.
BSI’s Global Supply Chain Intelligence report said that there were $22.6bn (£16bn) worth of losses due to cargo theft last year, and $33bn (£23bn) lost due to the biggest five natural disasters.
The report, based on continuous evaluation across 22 risk factors and 204 countries, predicted that in 2016, the biggest threats would be from cargo theft, labour unrest, terrorism, global health and migration.
Extreme weather, including many events attributed to the El Nino weather pattern, caused supply chain disruption and threatened business continuity in multiple regions in 2015, the report said.
In South Africa there has been a 30 per cent increase in cargo truck hijackings over the last year, involving high levels of violence and targeting lower, as well as higher value items.
The report said that daring thefts were increasing in China, with a recent series of in-transit vehicle thefts on the busy G45 highway. Thefts in India were more sophisticated with criminals stealing goods without breaking customs seals in order to avoid detection.
The report also found that increased terrorism incidents contributed to major disruptions to international shipping in Europe and the Middle East. Border controls in France following the November attacks in Paris are estimated to have cost the Belgian shipping industry $3.5m (£2.5m), the report said.
Terrorist-linked smuggling rings were colluding between Spain and the Middle East, while the Jordanian trucking industry has lost $754m (£532m) in revenue since conflict began in the Middle East in 2011, BSI claimed.
BSI said that the numerous cases of child and forced labour found last year highlighted the need for visibility into corporate supply chains.
Nearly 80 per cent of Argentina’s textile industry was sourcing from unregulated facilities where forced, child labour and poor working conditions are common, it said. Loopholes in India’s labour reforms last year created a risk of child labour, according to BSI.
Last year was also characterised by economic downturns in Argentina, Brazil, and China, and social unrest in Africa and Central America.
Labour unrest and factory strikes have caused considerable financial damage across the world, the report said. Factory strikes in China increased by 58.3 per cent from the previous year as a slowing economy caused pay disputes and protests. Labour unrest is likely to continue in China this year, the report predicted.
Jim Yarbrough, global intelligence program manager at BSI, said that companies were facing an increasingly wide range of challenges to their supply chain.
“Such complexity creates extreme levels of risk for organisations, both directly affecting the bottom line but perhaps more seriously, hidden threats to the supply chain which, if ignored, could do serious harm to a company’s hard-earned reputation.”